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Abstract: 

The FASB issued the exposure draft Fair Value Measurements (the Exposure Draft) in June 2004 to provide guidance for determining fair value of an asset or liability.1 The Exposure Draft encompasses all assets and liabilities that are measured at fair value under existing accounting standards except for those relating to share-based payment transactions, leases, certain revenue recognition transactions, measures of fair value included in Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan, and inventory pricing under Accounting Research Bulletin No. 43. The proposal will not change existing requirements to report certain assets and liabilities at fair value nor will it require additional fair value reporting. The standard will provide expanded guidance for reporting fair value when it is required. The standard defines fair value, discusses valuation techniques, and establishes a fair value hierarchy. In addition the proposal seems to elevate Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurement, to “Tier One” GAAP by incorporating the guidance in the Concepts Statement into this standard.

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Affiliations:  1: Missouri State University.